Stansted Owner Aims to Draw Airlines With $122 Million Overhaul

By Kari Lundgren -
Jul 30, 2013

Manchester Airports Group plans to
spend about 40 million pounds ($61.3 million) sprucing up
lounges and adding perks like valet parking to draw carriers
like Etihad Airways and Emirates to London’s Stansted Airport.

In partnership with retailers, the new owner of the
capital’s third-largest airport will commit a total of 80
million pounds on a program of improvements including fast-track
security lanes, a new food court and revamped shopping outlets,
Chief Financial Officer Neil Thompson said in an interview.

“We’re looking to use the relationships we have with the
other full-service carriers such as Etihad, Emirates, etcetera
to bring a richer mix of traffic to Stansted,” Thompson said.
“That typically incorporates broadening the product offering.”

MAG signed an agreement aimed at growing traffic with
EasyJet Plc (EZJ) in June, three months after buying Stansted for 1.5
billion pounds from Heathrow Airport Ltd., and is looking to
complete a similar deal with the airport’s largest operator
Ryanair Holdings Plc. (RYA) About an hour north of London, Stansted
serves 17.5 million people each year and has specialized in low-cost services.

Designed by U.K. architect Norman Foster, the facility
ranks behind Heathrow and Gatwick among terminals in southeast
England.

The airport will seek to tap the local catchment area of
eight million people and draw travellers with new destinations,
Thompson said. The landing strip, which now operates at about 50
percent of its capacity, has the potential to play a key role in
adressing the U.K.’s airport constraints, he added.

Newfound Focus

“Stansted has had no focus and no incentive as part of the
previous ownership to grow, so we’re going to change that,” the
executive said. “There is plenty of opportunity for growth
before any cost or expansion is required.”

All of London’s major airports submitted proposals this
month to a state-appointed Davies Commission on future airport
capacity. Boris Johnson, the city’s mayor, has said he favors
development of Stansted airport or a completely new base in the
Thames estuary costing 65 billion pounds, while Heathrow itself
has proposed adding a third runway by 2025-29 for as much as 18
billion pounds. Gatwick Airport said it could add a second
runway for as little as 5 billion pounds.

Heathrow, Europe’s biggest hub, served close to 70 million
passengers in 2012, while London’s second largest airport
Gatwick -- owned by Global Infrastructure Partners Ltd. after an
earlier BAA sale -- handled 34.2 million travelers. Both larger
facilities are operating close to the limits of their runway
capacity.

MAG’s sales for the year ended March 31 climbed 5.3 percent
to 393.1 million pounds, not including the one-month
contribution of Stansted. Operating profit jumped 12 percent to
73.6 million pounds in the period, the Manchester, England-based
company said in a statement. The group’s Manchester, East
Midlands and Bournemouth terminals served 24.5 million
passengers in the fiscal year.

Work to improve Stansted will be phased with the completion
of a new duty-free store in the summer of 2014, enhanced
shopping areas finished by mid-2015 and final touch-ups to a
renovated food court taking place through early 2016, Thompson
said. The facility is capable of handling about 35 million
passengers without major changes to the existing infrastructure,
he said.